Another Mine In Trouble But The Diamond Crisis Might Be Fading

A perfect 100-carat natural diamond to be auctioned at Sotheby’s in London. (Photo by Carl Cotter/Getty Images)

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The diamond accident claimed another victim this week, with South Africa’s Petra Diamonds launching a business rescue plan for its financially troubled Finsch mine.

South African law allows for the appointment of rescuers when a business is unlikely to repay its debts within the next six months.

Petra Chief Executive Vivek Gadodia said the rescue operation was necessary because of a weak diamond market and a strong South African currency, the rand.

Finch’s financial woes continue to lead to long-term closures of diamond mines around the world as the market feels the full impact of cheap lab-grown gems.

The sharp fall in the price of natural or mined diamonds has hit the performance of all miners, even industry leaders Russia’s ALROSA and London-based De Beers.

Alrosa’s struggles with low diamond prices are amplified by its Russian roots, best reflected in its shares hitting a record low of 25 rubles this week, down 48% in the past 12 months and 83% in the past five years.

De Beers, majority-owned by prominent mining company Anglo American, has been forced to take a series of asset value writedowns, including a $2.3 billion write-down in its accounts last year, $2.9 billion in 2024 and $2.6 billion in 2023.

The huge impairment charge clears the way for a sale of De Beers, possibly to a consortium of African diamond-mining countries including Botswana and Angola.

The long delay in executing the sale is believed to be due to potential buyers waiting for the natural diamond market to stabilize after three years of sluggishness.

De Beers chief economist Eirik Waerness sees signs that the sell-off in natural diamonds is coming to an end, in part due to lower mine production and tighter profit margins for lab-grown diamond manufacturers.

In a diamond report released yesterday by De Beers, Waerness said there are four key “drivers” that will shape the natural diamond market over the next five years.

In addition to a more favorable balance of supply and demand and squeezed margins in the lab-grown industry, a clear distinction between natural and lab-grown is important, as is marketing to rebuild consumer demand.